As the aging process takes place, we may find ourselves spending more money than anticipated. Unexpected costs such as out-of-pocket medical expenses, home renovations, or skilled care can add up quickly. Here are some questions and answers that you or your loved one may have about Reverse Mortgages.
What is a Reverse Mortgage?
A Reverse Mortgage, or also called a HECM (Home Equity Conversation Mortgage), is a kind of loan for homeowners who are over the age of 62 that can turn their home equity into cash.
How is a Reverse Mortgage Used in Aging?
The funds from a reverse mortgage can be used for many different things, but in this case, can help seniors stay in their home as they age. One of the requirements of a reverse mortgage is that the homeowner(s) occupy the home. A common use of funds from a reverse mortgage can be:
- Modifying or improving a home to make it more suitable for your elderly loved one.
- Pay for medical expenses that are otherwise out-of-pocket.
- Fund skilled nursing or other in-home care that’s needed.
Who is Suitable for a Reverse Mortgage?
There are three primary factors that the borrower(s) must have to be eligible for a reverse mortgage:
- Are 62 years of age or older.
- Have enough equity in the home to eliminate any mortgages that are existing.
- Have a home type that is approved by the FHA – such as a single-family
- home.
*One thing to note is that mortgage rules and regulations may have changed since the original loan was purchased. An example may be structural or flood zoning.
What are the Benefits of a Reverse Mortgage?
The majority of seniors may use funds from a reverse mortgage to help their financial situation.
- Access to Cash – If there is enough equity in the home, homeowners can receive a cash benefit that can help supplement their income.
- Eliminate Mortgage Payments – The funds received from a reverse mortgage will go toward paying off the balance on the existing mortgage. This not only eliminates a monthly mortgage payment but will increase monthly cash flow.
What is the Downside of a Reverse Mortgage?
The fees acquired from a reverse mortgage tend to be higher than a traditional mortgage. It’s important to find a reputable mortgage lender who is licensed by HUD (Department of Housing and Urban Development), and adhere to the National Reverse Mortgage Lender Association (NRMLA) guidelines.
Since seniors are living longer than ever before, it may be of interest to discuss with your loved ones about the benefits or a reverse mortgage in the future. If you have more questions, we have resources that can help. Give us a call at (203) 520-0116.
Located in Greenwich, CT, CT Help at Home is proud to be a top-rated home health care provider in Fairfield County, CT, Westchester County, NY, Manhattan, NY and beyond. Our clients are our family and we treat everyone with compassion and care. Contact us today to see how we can help you and your loved ones: (203) 520-0116.